Chinese education companies have had a tough time of late due to the prospect of tough regulations and one of the Chinese education companies which saw its stock fall sharply this past Friday was that of RISE Education Cayman Ltd (NASDAQ:REDU).
The stock fell by as much as 9% on Friday after the company announced that due to the current regulatory situation in China, it had no plans to announce its quarterly earnings. However, RISE went on to add that it was going to provide further information regarding the same if fresh developments take place.
In this context, it is perhaps important for investors to have a look at the nature of the company’s business. RISE is involved in a particular niche in the education market and is primarily involved with developing the cognitive skills among children in China through aptitude training. The company uses a special model known as the Online-Merge-Offline or OMO model for this purpose. However, at this point in time, the regulatory situation in China has created a lot of uncertainty regarding this sector and hence, investors need to be a big more careful with regards to these stocks at this point in time.
